EMEA: CBR, BoI and CBT to decide policy rates

Barclays notes:

In Russia, we and consensus expect the Bank of Russia (CBR) to slow the pace of easing and lower its policy rate by 50bp to 11% on Friday MPC meeting. At the most recent meeting, the CBR signalled that it will slow the rate of cuts in upcoming meetings and did not rule out possibly remaining on hold depending on the data. We think the CBR has reasons to continue cutting. While inflation remains high it is likely to experience a marked decline towards 7.5% by mid-2016. Meanwhile, the growth trajectory remains depressing as June real sector data confirm the recession. In addition, the recent decline in oil may give some incentive for RUB weakness to partially offset the unfavourable impact on fiscal balance.

In Israel, Bank of Israel (BoI) is widely expected to remain on hold at 0.10% next week. Inflation has started to increase, and the BoI forecasts that it will move up to the centre of the target by mid-2016. However, ILS appreciation remains unwelcome given the underperformance in exports, and recently caused the BoI to considerably increase its FX intervention. We reiterate our long USDILS recommendation ahead of the rates meeting.

In Turkey, CBT will publish its July quarterly inflation report next week. It will be important to see whether CBT will have any revisions in inflation forecasts on the back of recent TRY weakness; and provide any insights on potential simplification of monetary policy in the coming months, which seem to be expected by the local market participants.